"Taken together, and with inflation contained, these circumstances have called for a rapid and forceful response of monetary policy," the Federal Open Market Committee said in a statement.

The move, which followed a surprise half-percentage point cut earlier this month, didn't surprise local economists.

Diane C. Swonk, senior vice-president and chief economist at Bank One Corp. in Chicago, expected Mr. Greenspan to lower interest rates by a half-percentage point as an "insurance policy against a recession." But she says he's already introduced ingredients to reaccelerate and grow the economy.

Mr. Greenspan could be setting the stage for widespread rebounding as he hedges against another recession, Ms. Swonk says. Job cuts that are supposed to occur over a number of years, such as those announced this week by DaimlerChrysler AG, may not take place if the economy improves in the short term, she says.

Whether he's correcting earlier mistakes or trying to stay ahead the curve, Ms. Swonk says Mr. Greenspan is sensitive to talks of recession, and could drop the rates by another quarter-point in March. "Mr. Greenspan got blamed for one Bush recession (in the early 1990s), and he won't be blamed for another."

Bernard Lashinsky, a Chicago-based consulting economist and a columnist for ChicagoBusiness.com, predicted the Fed would cut interest rates by a quarter-point. The half-point cut shows a significant change in attitude, Mr. Lashinsky says, noting that Mr. Greenspan's support of President Bush's tax cut proposal indicates heightened concern about the future of the economy.